According to Credit Suisse Investment Bank: Growth in demand will moderate and GDP will fall to 3% • More forecasts: The shekel will remain strong and the Bank of Israel is not expected to intervene in the market situation

• Credit Suisse. "Political uncertainty will continue" // Photo: Reuters

Israel's economy will remain stable, despite political uncertainty and currency resilience - for example, Credit Suisse for 2020.

"Domestic demand growth is likely to slow somewhat, but trade contribution is expected to improve, except in the event of escalation in the global trade wars," the Bank's economics forecast. "With low inflation and strong currency, the Bank of Israel is expected to continue to avoid market purchases with a slight tendency to expand."

At the macroeconomic level, Credit Suisse predicts that the situation is expected to be "benign" in 2020, indicating that the Bank of Israel expects real GDP growth of 3.0% next year, compared with 3.1% in 2019.

According to forecasts of the Bank of Israel, growth rates for all three components of domestic demand (private consumption, investment and government spending) are expected to moderate by 2020. These declines are largely offset by an increase in the net export contribution to GDP growth. Inflation in 2020 is expected to remain below or at the lower end of the Bank of Israel's target range, 3% to 1%.

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Credit Suisse warns that political uncertainty will continue into the first half of 2020 and will translate into weakness in investment spending especially in the housing sector. In addition, like many small and open economies, the Israeli economy is exposed to potential deterioration due to the US-China trade war.

Regarding monetary policy, Credit Suisse notes that "the Bank of Israel has changed course over the last few months." While lowering interest rates by up to 0.10% (the historic low that prevailed between February 2015 and November 2018) is possible, the threshold for even more aggressive policies is likely to be quite high unless economic activity slows down significantly.

At the global level, Credit Suisse expects global economic growth at a moderate rate of 2.5%, but with no risk of recession. The US economy is projected to record slower GDP growth of 1.8%, accompanied by growing core inflation. The US dollar is expected to remain stable, but will weaken during the year. In the Eurozone, monetary policy is not expected to improve, but robust credit growth is expected to support a steady economic growth, with a GDP growth forecast of 1%. In China, the government is expected to set a 5.9% GDP growth target, a slower rate than in 2019.